Posts Tagged ‘Wall Street’

International financial organizations such as the International Monetary Fund and the World Trade Organization have come to be a kind of world government, dictating policy to supposedly sovereign governments.

I recently read a book, The Making of Global Capitalism (2012) by two Canadian leftists named Leo Panitch and Sam Gindin, on how this came about. I thank my friend Tim Mullins for recommending it.

It’s quite a story. It is not well understood.

The first part of the story is the U.S. New Deal. President Franklin Roosevelt and the Democratic Congress gave the U.S. Treasury Department and the Federal Reserve System the authority they needed to stabilize the crumbling U.S. financial and banking system.

The second part is the 30 years following World War Two. Under the leadership of the U.S. Treasury and Federal Reserve, international financial institutions were created that duplicated the U.S. system. They presided over the era of greatest peace and prosperity that North Americans and Europeans had ever since.

The third part is what happened after that. The world’s financial system endures a series of ever-greater financial crises. To deal with them, international financial institutions demand the surrender of gains made by American and European workers and the middle class in the earlier era.

The irony is that a financial governing structure created by American power is now stronger than ever, while the actual American economy is rotting away beneath it.

Panitch and Gindin described in great detail how this happened, step-by-step,.

There are two ways of looking at the $400,000 speaking fee that ex-President Barack Obama will receive from the Wall Street brokerage firm of Cantor Fitzgerald for speaking at a health care investment conference.

The other is that Obama is merely doing what all but one of the ex-Presidents from Gerald Ford onward have done, which is to use speaking fees cash in on his celebrity status.

Hillary and Bill Clinton’s speaking fees were a special case because Hillary Clinton was a future Presidential candidate. Hillary’s $675,000 in Goldman Sachs speaking fees could be interpreted as payments not only for services rendered, but for services anticipated. That suspicion was reinforced by Clinton’s refusal to release the texts of her talks.

I imagine that Barack Obama will have sense enough to watch his words enough to be able to release the text of his Cantor Fitzgerald talk without embarrassment.

Obama is not doing anything unusual. All but one of the Presidents from Gerald Ford through George W. Bush cashed in with big speaking fees after they left office.

This is the new normal. In this neoliberal age, an ex-President such as Harry Truman or Jimmy Carter who refused to monetize the office of the Presidency would seem quaint and strange.

American Airlines agreed this week to do something nice for its employees and arguably foresighted for its business by giving flight attendants and pilots a preemptive raise, in order to close a gap that had opened up between their compensation and the compensation paid by rival airlines Delta and United.

Wall Street freaked out, sending American shares plummeting. After all, this is capitalism and the capital owners are supposed to reap the rewards of business success.

“This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers.”

Indeed, major financial players were so outraged by American’s decision to pay higher wages that they punished airline stocks across the board. American itself took it hardest on the chin, of course, but the consensus among stock analysts was that higher pay at American could signal higher pay at other airlines too, with negative consequences for the overall industry.

In the opening of Kim Stanley Robinson’s new SF novel, New York 2140, two unemployed financial software engineers known as Mutt and Jeff—unemployed because they refuse to design a possibly illegal program for high-speed trading—contemplate a flooded lower Manhattan from atop the former Metropolitan Life building.

One of them says he has figured out what’s wrong with capitalism.

The basic problem with capitalism, he says, is that the forces of the market forces producers to sell products below cost.

This enables an individual enterprise to survive (sometimes), but, in the long run, leads human society into bankruptcy.

In the novel, global warming has taken place, sea levels have risen and lower Manhattan is under water. Skyscrapers such as the Met Life building are still survive amid a kind of new Venice. Uptown Manhattan is 50 feet higher in elevation, and is dry. In the middle is a tidal zone, where the poor and homeless congregate.

Some environmental problems have been solved, or at least are being coped with. Gasoline, jet fuel and other fossil fuels no longer exist. Air travel is by dirigible, ocean travel is by sailing ship and land vehicles are electric. But the financial structure and distribution of income are more or less like they are now.

New skyscrapers—”superscrapers”—in uptown are owned by the world’s wealthy elite, as investments or as one of multiple homes, and are often vacant.

A hurricane late in the novel leaves many homeless. They try to storm the vacant uptown towers, and are turned back by private security forces, who outgun the New York Police Department.

Rather than attempt a violent revolutionary overthrow, the common people attempt a political and economic jujitsu.

They join in a nationwide debt strike. On a given day, they stop paying their mortgages, student loans and credit card balances. The financial system is go highly leveraged with debt upon debt that it comes crashing down, just as in 2008. So the financiers go to Washington for another bailout, just as they did then.

But this time, the President and Federal Reserve Chairman, who are in on the plan, act differently. They tell the banks and investment companies that they would be bailed out only on one condition—that the government be given stock of equal value to the bailout, as was done in the bailout of General Motors. Those who refuse this deal are allowed to fail.

Now the federal government has the authority to force the banks to act as public utilities. And the huge profits that once flowed to the financial elite now flow to Washington, which makes it possible to adequately fund public education, infrastructure improvement, scientific research and all the other things the country needs.

And so the American people live happily—not ever after and not completely, but for a while.

Now Trump has put two former Goldman Sachs executives in charge of economic policy—Steve Mnuchin, former Goldman partner, as Secretary of the Treasury, and Gary Cohn, former president of Goldman, as his top economic adviser.

President Trump has put a portrait of Andrew Jackson, the great enemy of concentrated financial power, in his office. But his appointments show that he will be a champion of the moneyed establishment. Those who voted for him in hope he would be a friend to working people are going to be disappointed.

Political scientist Thomas Ferguson is always worth reading and listening to. In this interview with Paul Jay of the Real News Network, he said the Democratic formula of “Wall Street plus identity politics” is dead.

That formula is to take Wall Street money and then champion the interests of women and minorities in ways that don’t threaten Wall Street’s profits.

The problem from the standpoint of the Democrats is that so many people—including women and minorities—are more worried about keeping their jobs, earning a decent wage and paying their bills than they are about Donald Trump’s offensive way of speaking.

But it’s hard to do anything about jobs, wages and debt and stay in the good graces of big donors.

He said Donald Trump could be a popular and successful President if he follows through on certain of his campaign promises, particularly the one to begin a major public works—that is, infrastructure—program.

I think there is a strong possibility that Donald Trump will be a one-term President—provided there are still free and fair elections in 2020.

I think that for the same reasons I thought Hillary Clinton might be a one-term President. I believe there will be another recession, as serious as the last, during the next four years, and I think Trump will be even less able to cope with it than Clinton.

He campaigned as a populist champion of the common people against the elite. But he spent his life among the elite, and his business history shows that he is only tough with those with less wealth and power than he has.

Trump kicks downward. He doesn’t punch upward.

His transition team is drawn from K street lobbyists. His preference is to appoint from the private sector, not from government or academia.

His likely choice for Secretary of the Treasury is Steven Mnuchin, his campaign finance chairman. Mnuchin is CEO of an investment firm called Dune Capital Management, but, according to POLITICO, he worked 17 years for Goldman Sachs, whose subprime mortgage manipulations were a big contributor to the last recession.

The problem is that, in a recession, what makes sense for a business owner doesn’t make sense for a President. A business owner’s instinct in tough times is to cut back. That is rational behavior for the individual, but cutting back means less money in circulation, less economic activity and a worse recession.

Back in 2006, Donald Trump said he was sort of looking forward to the coming housing crash, because he could cash in—presumably by buying up distressed properties.

However, Trump didn’t do anything to cause the housing crash. In contrast, Hillary Clinton’s benefactor and social friend, Lloyd Blankfein of Goldman Sachs, not only benefited from it, but helped to bring it about.

His firm bought up subprime mortgages. That meant lenders could make “liar’s loans” they knew would never be paid back, and eliminate their risk by selling them to Goldman Sachs.

Goldman Sachs converted the mortgages into securities, like stocks or bonds, and sold them on the open market. They got rating agencies to label the securities as high quality investments, even though Goldman Sachs management knew they weren’t.

They made other investments based on the assumption that the market would crash and the securities would become worthless.

All this happened when Lloyd Blankfein was CEO of Goldman Sachs. He became CEO in 2006 and before that was chief operating officer.

Goldman Sachs has given Hillary Clinton $675,000 for making three speeches, and husband Bill Clinton $1.55 million in speech fees.

The firm’s employees as a group are among the top five contributors to Hillary Clinton’s campaigns.

Goldman Sachs also hosted the Clinton Global Initiative; the video above shows a picture of Hillary Clinton and Lloyd Blankfein at a CGI meeting.

How likely is it that a Clinton administration would prosecute Goldman Sachs officials for financial fraud? How likely is it that a Clinton administration would bring financial malpractice under control? The likelihood is next to zero, in my opinion.

I looked forward to reading Thomas Frank’s LISTEN, LIBERAL -or- What Ever Happened to the Party of the People? I finished reading it over the weekend, and it’s as good as I thought it would be.

It is an explanation of how the Democratic Party ceased to be an advocate for the interests of working people and organized labor, and instead became the party of the credentialed professional class, as exemplified by Bill Clinton, Barack Obama and Hillary Clinton.

Thomas Frank is best known for his book, What’s the Matter With Kansas? which is about how a once-radical state became a stronghold of the right wing. In this book, he explains how the party of the New Deal became the party of bank bailouts and pro-corporate international trade deals.

Thomas Frank

The change began with the split between college-educated idealists and blue collar union workers in the late 1960s. Young radicals thought that the New Deal was yesterday’s news and that labor leaders such as the AFL-CIO’s George Meany were obstacles to peace in Vietnam and justice for minorities and women.

The young radicals triumphed in 1972 when they nominated George McGovern for President, under convention rules written so as to guarantee representation for minorities, women and youth, but not for union members.

When McGovern went down in humiliating defeat, the party leaders rewrote the rules so as to prevent another McGovern from arising again. They did not, however, return to their New Deal roots. Instead they started to bid against the Republicans for support of the business class.

These two factions of the Democratic Party – social liberals and the business conservatives – eventually came together.

Their common ground was belief that the world should be run by an elite of smart people. Their liberalism consisted of belief that there should be equal opportunity to enter this class based on educational credentials and professional achievement.

The idea was not to raise the material standard of living poor people and the working class in general, as in New Deal days. It was to give everybody, through access to education, an equal chance to be part of the elite, regardless of race, ethnicity, gender, sexual orientation or social or economic class.

Then, if you still couldn’t succeed, it would be your own fault. Maybe you didn’t study hard enough in the fifth grade.

This is not to say that Democrats became the same as Republicans.

Republican leaders wanted to be governed by an elite of tough, successful competitors. Democratic leaders want to be governed by an elite of enlightened thinkers.

Republican leaders embrace economic inequality because they believe the laws of the free market are moral values. Democratic leaders accept economic inequality because they believe the laws of the free market are scientific laws. Republicans despise losers. Democrats sympathize with losers, but do not think it is feasible to help them.

Republicans govern in the interests of the top 1 percent of income earners. Democrats, as Frank wrote, govern in the interests of the top 10 percent. [1]

Wall Street is still doing much better than Main Street. And while salaries for financial sector workers are leveling off, the salaries and bonuses of Wall Street CEOs are still rising.

A Fortune magazine writer reported that average Wall Street CEO compensation rose nearly 10 percent last year, while the wages of average American workers rose only 1.6 percent.

Healthy and honest financial markets are necessary for a free enterprise capitalist economy, but I don’t see any justifiable reason why Wall Street should prosper while the rest of the country doesn’t.

In American politics today, there are three main factions and only two parties to represent them. One faction has to lose and, if Hillary Clinton and Donald Trump are nominated, it will be the Bernie Sanders progressives.

Donald Trump speaks to the concerns of working people—especially pro-corporate trade deals and deindustrialization—but he has no real solution.

His economic nationalism, while not a complete answer to U.S. economic problems, is preferable to the corporate trade deals of the Bill Clinton, George W. Bush and Barack Obama administrations.

But by pitting white working men against Hispanics, blacks, immigrants and feminists, he prevents the working class as a whole from ever having enough clout to defend their interests.

Thomas Frank wrote an excellent book about how the Republicans may be the party of the wealthy elite, representing the upper 1 percent of American income earners, but the Democrats are the party of the educated professional elite, representing the rest of the upper 10 percent.

This year’s political realignment may change this, as he himself implicitly acknowledged in a new article in Vanity Fair. Under Hillary Clinton, Democrats are becoming the party of the upper 1 percent as well. Here is the meat of what Frank wrote.

Rich Americans still have it pretty good. I don’t mean everything’s perfect: business regulations can be burdensome; Manhattan zoning can prevent the addition of a town-house floor; estate taxes kick in at over $5 million. But life is acceptable. Barack Obama has not imposed much hardship, and neither will Hillary Clinton.

And what about Donald Trump? Will rich people suffer if he is elected president? Well, yes. Yes, they will. Because we all will. But that’s a pat answer, because Trump and Trumpism are different things. Trump is an erratic candidate who brings chaos to everything. Trumpism, on the other hand, is the doctrine of a different Republican Party, one that would cater not to the donor class, but rather to the white working class. Rich people do not like that idea.

In February, 1,400 employees of Carrier Air Conditioner in Indianapolis were told their jobs were being transferred to Mexico to cut costs.

It turns out that, according to the annual report of United Technologies, its parent company, that Carrier was a profitable and growing business segment. In 2015, it was UT’s best-performing division in the company.

So why mess with it? UT management hoped to boost the company’s stock price by cutting costs. Managers say they plan to keep on cutting costs for the indefinite future, evidently without regard to

All this runs contrary to the way I was taught in college that a capitalist free enterprise system is supposed to work.

I was taught that the duty of corporate management is to ensure that the corporation survives and is profitable into the indefinite future. This goal is achieved by making good products and at a reasonable price, and provide good customer service. To do this, it is necessary to re-invest a good portion of the profits in the business.

UT management’s philosophy is evidently the opposite—to take money out of the business and give it to the passive shareholders.

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The New York Times evidently had a good article on this, which unfortunately is behind a pay wall. David Dayen summarized its conclusions in an article for Salon.

Last year, Carrier produced a significant chunk of total profits for its parent company, United Technologies. Of $7.6 billion in earnings in 2015, $2.9 billion came from the Climate, Controls & Security division, where Carrier resides. Profits from this division have expanded steadily in recent years, which is not what you’d expect from a unit desperate to cut labor costs.

A look at United Technologies’ annual report reveals even more good news: Commercial and industrial products, Carrier’s category, make up over half of UTC’s $56 billion in net sales. Climate, Controls & Security had 3 percent growth in 2015, the highest in the company; it was the only division to increase its profit margin year-over-year.

“Organic sales growth at UTC Climate, Controls & Security was driven by the U.S. commercial and residential heating, ventilation and air conditioning (HVAC) and transport refrigeration businesses,” according to page 14 of the report. In other words, air conditioners – what the workers are making in Indianapolis – drove the growth of the best-performing facet of United Technologies’ business.

So why would a profitable, growing business need to ship jobs to Mexico? Because their shareholders demanded it.

The Federal Reserve Board’s policy of qualitative easing has helped the stock market recover. But Americans who work in the real economy are still struggling.

Qualitative easing is the Federal Reserve Board’s policy of creating new money to buy Treasury bonds in order to keep interest rates low. The greater the demand for bonds, the lower the interest rates, and the interest rate on Treasury bonds is generally the benchmark on all Treasury bonds.

The Fed’s Operation Twist was a sale of medium-term Treasury bonds and purchase of 10-year bonds. The Federal Funds rate is the interest rate for overnight loans among banks so they can meet the Federal Reserve’s requirement for reserves.

The chart above shows how QE correlated with the ups and downs of the stock market. But, as I indicated in a previous post, American corporations did not advantage of low interest rates to invest in their businesses. Instead they have transferred the gains to stockholders in the form of stock buybacks.

An economic recovery has taken place. Most Americans are better off than they were at the depths of the crash. But as economic recoveries go, this one has been weak.

The chart shows how important is it to always adjust for inflation. A dollar in the year 2000 is not the same thing as a dollar in the year 2016.

Although corporate executives did not take advantage of Qualitative Easing to invest in America, there was nothing besides politics holding back the federal government from investing in public works. There is a lot of urgent work that needs to be done in maintaining and upgrading American’s physical infrastructure, such as upgrading public water systems to get the lead out.

With a lot of public work that needs to be done, a lot of people who need work and financing costs at historic lows, why not put the unemployed and under-employed to work doing what needs to be done? Fiddling with interest rates and the money supply is not enough.

Cartoonist Ted Rall writes in his syndicated column that Democrats who support Hillary Clinton don’t know her record.

Bill and Hill have raked in $153 million in speaking fees since 2001. Which is more than the GDP of three countries. But how many Democratic primary voters know that she is one of the most personally corrupt leaders ever, or that the Clintons have probably sold more political access to corporations than all other American politicians in history combined?

Based on tracking polls and her current delegate lead, roughly the same number of Democrats is aware of Hillary’s record as Republicans who believe in science.

Granted, the fix is in for Hillary. The DNC scheduled debates at times when no one would get to see Bernie. The wildly antidemocratic super-delegate system designed to prevent progressives from getting nominated has been working perfectly. Super Tuesday, another scheme to conservatize races by front-loading southern states, went to her. And corporate media doesn’t cover him.

Given the obstacles, he’s kicking ass. Nevertheless, watching Hillary’s tortured defense of her indefensible refusal to cough up her Wall Street transcripts the other night, I was struck by how easily a voter who comes to Clinton v. Sanders cold, ignorant of the two candidates’ records, could conclude that she’s more qualified for the presidency.

She’s great — if you don’t know your stuff. Judging from the results so far, many Democratic voters are voting based on vague impressions rather than the hard facts — which makes them no smarter than the conservative evangelists backing the vulgar, thrice-married, breast-ogling Trump.

In the 1950s and 1960s, the Eisenhower and Nixon administrations taught the Republicans to accept the New Deal.

In recent times, the Clinton and Obama administrations taught the Democrats to accept Reaganomics.

Democrats cannot adequately represent working people unless they free themselves from that legacy.

Thomas Frank wrote a good article in The Guardian about this:

In my younger days, the Democratic party seemed always to be grappling with its identity, arguing over who they were and what they stood for all through the 1970s, the 1980s and into the 1990s.

Bill Clinton

What Democrats had to turn away from, reformers of all stripes said in those days, was the supposedly obsolete legacy of the New Deal, with its fixation on working-class people.

What had to be embraced, the party’s reformers agreed, was the emerging post-industrial economy and in particular the winners of this new order: the highly educated professionals who populated its clean and innovative knowledge industries.

The figure that brought triumphant closure to that last internecine war was President Bill Clinton, who installed a new kind of Democratic administration in Washington.

Rather than paying homage to the politics of Franklin Roosevelt, Clinton passed trade deals that defied and even injured the labor movement, once his party’s leading constituency; he signed off on a measure that basically ended the federal welfare program; and he performed singular favors for the financial industry, the New Deal’s great nemesis.

In the Reagan era, I thought that since the Republican Party had become an ideological party of the right, the Democratic Party would become an ideological party of the left, and this would result in meaningful choice for voters.

Hillary Clinton asks her supporters to believe that there is no contradiction between accepting big campaign contributions from Wall Street, the private prison industry and the oil and gas industry, and promising to crack down on Wall Street, private prisons, fracking and greenhouse gas emissions.

Hillary Clinton says it is possible to take a donation to an interest group and not be captive to it. That is true. But it is harder to ask an interest group for money and still vote against its interests. In any case, it is something you can only do once, and Clinton has been around for a very long time.

Either her fat-cat donors are being fooled, or her supporters are. I wouldn’t vote for a candidate based on a hope that he or she is telling me the truth and misleading somebody else.

Hillary Clinton says she hasn’t done anything that President Obama hasn’t done. That is true. That is why I voted for Jill Stein, the Green Party candidate, when Obama ran for a second term.

What did Hillary Clinton say in her three 2013 speeches for Goldman Sachs that was worth $675,000 to hear?

So far she has refused to release the transcripts, but reporters for POLITICO interviewed members of the Goldman audience on what she said.

Clinton offered a message that the collected plutocrats found reassuring, according to accounts offered by several attendees, declaring that the banker-bashing so popular within both political parties was unproductive and indeed foolish.

Striking a soothing note on the global financial crisis, she told the audience, in effect: We all got into this mess together, and we’re all going to have to work together to get out of it. What the bankers heard her to say was just what they would hope for from a prospective presidential candidate: Beating up the finance industry isn’t going to improve the economy—it needs to stop.

The crooked financial dealings of Goldman Sachs were an important factor in the financial crash of 2008. The company wrote sub-prime mortgages its brokers knew could not be paid off, repackaged them to seem like secure investments and then after unloading them on gullible customers, made financial bets that they would become worthless. Many people lost their homes and savings.

Matt Taibbi of Rolling Stone summed up the situation well.

The Clintons … have by now taken so much money that when they stand in a room full of millionaires and billionaires, they can use the word “we” and not have it sound odd. The money has irrevocably moved them to that side of the rope line. On that side of the line, public anger isn’t legitimate, but something to be managed and waited out … .

Hillary Clinton in 2013 received $1.8 million in speaking fees from Wall Street banks and investment firms—$675,000 from Goldman Sachs alone.

HIllary Clinton

Her husband Bill has received $7.7 million from speeches to banks in the past 15 years. In all, CNN reported yesterday, the Clintons have received $153 million over the years in speaking fees to various groups. That’s more than many middle-class people make in a lifetime.

If I voted strategically, instead of for the candidate I want to win, I probably would vote for Hillary Clinton in the New York Democrat primary and for the Republican candidate in the general election.

The reason is that whoever is President from 2017 to 2021 is going to be blamed for the next stock market crash — unlessithappenslaterin the current year — and it almost certainly will be worse than the 2008 crash.

It will be worse than the one before because nothing has been done to address the abuses that caused the previous crash—neither punishing accounting control fraud, nor breaking up the “too big to fail” banks, or curbing reckless speculation, nor creating good jobs, nor reducing income inequality.

The main thing that is propping up the financial markets is the Federal Reserve Board’s lid on bank interest rates, which drives investors into the stock and bond market, and this cannot go on forever.

If the Presidency is held by defenders of the status quo, it will be easier in 2020 for progressives to make the case for changing the status quo.

Mike Lofgren’s new book, The Deep State, describes the interlocking U.S. military-industrial complex, financial oligarchy and police state which is not subject to either the rule of law or democratic control. The particulars of his description are available in the previous two posts and in the linked articles.

Here’s what I think needs to be done in order to rein in the Deep State.

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Congress should exercise the power of the purse to prevent the President from committing acts of war on his or her own initiative. President Obama has stated that he considers himself free to attack foreign countries by means of bombing from the air, killer drones and Special Operations because these things are not war. It is only war when large numbers of American ground troops are involved.

Refusing to levy taxes is the historic method used by parliaments and national assemblies to force absolute monarchs to cease aggressive wars and submit to the rule of law. The U.S. precedent is the Case-Church Amendment of 1973 forced a cutoff of funds for military operations in Vietnam after August 15 of that year, and brought the Vietnam Conflict to an end.

Congress should pass a resolution ending funding for military operations and military aid and subsidies in the Middle East after a specific deadline, except for what is specifically authorized by Congress.

And if the executive refused to comply with that resolution? The Constitutional remedy for this is impeachment.

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Congress should pass a law allowing prosecuted whistle-blowers to be acquitted if they can show that the information they revealed was kept secret in order to cover up lawbreaking, incompetence or failure, to limit business competition, or to suppress information that is not related to national security.

The Deep State is author Mike Lofgren’s term for power centers in Washington, Wall Street and, to an extent, Silicon Valley that determine government policy, yet operate in secret, without accountability to the law or democratic control.

He wrote in The Deep State that the USA is condemned to unending war and economic decline unless the power of the Deep State can be overthrown.

The power of money. Wall Street banks and military contractors have more money available to influence elections than any of their critics do. The Supreme Court has ruled the corporate entities have the same rights as individual human beings, and that spending money can be an exercise of the right of free speech, so there is no practical limit on how much money can be spent on a campaign.

The power of subversion. The FBI has a long history of infiltrating civil rights and peace organizations with informers and undermining them from within. Ditto for the CIA in foreign elections. If the FBI and CIA felt threatened, is there any doubt they would use whatever tools they had to protect themselves?

The power of information. The NSA has the means of learning the personal habits and behavior of every American. Who is there who doesn’t have something in their background that looks bad, or can be made to look bad? The precedent for this is the FBI’s spying on Dr. Martin Luther King Jr., and its dissemination of information about his sex life.

The power of repression. The police crackdown on the Occupy Wall Street movement, which was coordinated by the Department of Homeland Security, shows how the government treats peaceful protest movements as national security threats.

Suppressing the vote. Many techniques exist for suppressing the vote or making votes meaningless. New laws intentionally make it more difficult for members of targeted groups to vote or easier to disqualify them from voting. The Dieboldt electronic voting machines allow vote tampering. and there is some evidence this is happening.

Financial power. When President Bill Clinton took office in 1993, he intended to propose an ambitious program of public workers. He never did, because he was told this would cause the “bond markets” to lose confidence in him, and interest rates to rise, choking off the economic recovery and increasing the national debt. If a future President attempted to curb the power of Wall Street, is there any doubt that the financial markets would “lose confidence” in him or her?

Economic dependence. The Department of Defense and other parts of the Deep State employ millions of people, almost all of them honest, patriotic people who believe they are serving their country. Reducing the size of these institutions to what’s needed to defend the country would throw many of them out of work. Without some alternative, this would not only damage the lives of these individuals, but possibly throw the country into recession.

Learned helplessness. Many Americans have come to think of economic oligarchy and perpetual war as facts of life, about which nothing can be done.

Mike Lofgren is a Washington insider. He was a Republican congressional staff member for 28 years, including 16 years as a senior analyst on the House and Senate budget committees.

He has written a book, THE DEEP STATE: The Fall of the Constitution and the Rise of a Shadow Government, about governmental and private institutions that operate above the law, and independently of the will of the citizens, and how they interlock in ways that mutually reinforce their power.

The Deep State includes the bankers who were prosecuted for financial fraud because they were “too big to fail” and CIA torturers who were not prosecuted or dismissed because that would demoralize the agency.

It is the force that makes the government engage in bank bailouts, warrant-less surveillance and undeclared wars. It is the force that has made the American public accept endless war and economic stagnation as normal. It is the explanation of why partisan gridlock and financial sequesters never affect the availability of money to subsidize foreign military forces.

Lofgren’s Deep State includes President Eisenhower’s “military industrial complex”, the FBI, CIA and NSA and their supposed overseers in Congress and the federal courts, Wall Street and its supposed overseers in the Treasury and Justice departments, and Silicon Valley.

They work together, and have revolving doors through which people can move from one to another—for example, General David Petreaus, after his retirement from the military, to a seven-figure job at KKR, a Wall Street private equity form.

None of this is the result of a conscious conspiracy, Lofgren wrote. It is a natural evolution of power without accountability, and the “group-think” of people who never have their assumptions questioned.

The Federal Reserve System pumped billions of dollars into failing banks by buying up their toxic assets, and pumped up the stock market by holding down interest rates to as near as zero as possible.

This benefited Wall Street and the big banks, but, as the chart above demonstrates, it didn’t help the real economy much.

The top line on the graph shows the amount of money the Fed pumped into the banks. The next line shows the amount of new money that actually went into circulation. The third line shows the amount of loans the banks made. The line in the second chart shows the rate of inflation by the most conservative measure.

A lot of individual savers bought stocks and bonds because their banks wouldn’t give them any interest on their savings accounts. This would have been a good thing if the money that went into the financial markets had been invested in starting or expanding businesses, but this didn’t happen.

Corporations are sitting on trillions of dollars in cash.They understand that the speculative boom sparked by qualitative easing is bound to crash.